FTC Has Fielded 2,046 Yelp Complaints Since 2008; Necessary Evil?

By William Peacock, Esq. on
April 4, 2014 11:39 AM

We've written about the so-called Yelp "scam" in the past. Many, including a judge, have compared the site to the mafia because of its alleged favorable treatment of those who pay for advertising. Basically, the common (and so far unproven) complaint is that if a business turns down Yelp's advertising overtures, their positive reviews are filtered out, and negative reviews are given more prominent placement.

Of course, individual anecdotes, the kind plastered in the multiple news stories we've seen on this topic, could just be bitter businesses with legitimately disgruntled customers. What about the 2,048 complaints since 2008, a little more than five years? The Wall Street Journal sent a Freedom of Information Act (FOIA) request to the Federal Trade Commission, which responded with the big figure. When the FTC posted the letter on its site, it sent Yelp's stock plummeting 6 percent Wednesday afternoon.

But still, even if Yelp is (allegedly) a scam, can you choose to ignore it?

The Power of Yelp

The Wall Street Journal cites a Harvard Business School study that shows just how powerful Yelp can be. Each one-star increase in user ratings can boost sales by 5 to 9 percent.

Think about it from your own experience: How reticent are you to try a restaurant, or a mechanic, or any other business that has a three-star or lower rating? It's the reddest of red flags for someone searching for a business on the Internet, especially since Yelp often appears in the top search results on Google.

Managing Yelp the Right Way

Even if you can't afford advertising (Yelp claims that paying for advertising won't help your review score), there are things you can do to manage your Yelp reviews. To start, encourage satisfied clients to leave positive reviews.

We've written about how to deal with negative reviews before. If a client is disgruntled, be proactive and try to manage the client before bar complaints and bad Yelp reviews appear. When someone does leave a negative review, you (as the business owner) are allowed to post a response. Use kind language, offer to discuss the matter directly, and do not discuss any confidential information.

Finally, don't "astroturf." This is the practice of peppering your page with fake reviews, written either by yourself or by a third-party review service. Not only does Yelp filter out many of these spam reviews, but ethics rules state that lawyers may not make false or misleading statements about their services. Paid recommendations are forbidden as well.

If you need a cautionary tale, look no further than the McMillan Law Group's battle with Yelp. McMillan sued Yelp and won, until an appellate court reversed and forced the case into arbitration. Yelp then countersued, claiming that McMillan posted false reviews on its Yelp profile. The review website's complaint included copies of the fake reviews, many of which came from the firm's internet protocol (IP) address.